Lisa Su, CEO, AMD

Scott Mlyn | CNBC

AMD shares reached a session high on Thursday following a media report claiming the chipmaker was working with Microsoft on a new artificial-intelligence processor.

Microsoft’s top competitors in the cloud infrastructure market, Amazon and Alphabet, both have their own specialized chips that software developers can use to train models. But Microsoft to date has not released a special-purpose AI chip. The one in development in partnership with AMD carries the code name Athena, and it will be able to train models and make inferences on new data, Bloomberg reported.

Microsoft is helping AMD to fund the initiative, Bloomberg reported, citing anonymous sources.

Nvidia shares moved lower following the report. Like other large technology companies, Microsoft relies on Nvidia graphics processing units to run AI models.

AMD and Microsoft both declined to comment on the report.

The need for silicon that can handle AI has become more critical than ever in the past six months, particularly at Microsoft, which provides the computing resources for startup OpenAI’s viral ChatGPT chatbot. The technology has required thousands of Nvidia GPUs, Microsoft has said.

But Microsoft also needs chips to run its own applications that draw on the GPT-4 large language model at the heart of ChatGPT. Large language models belong to a class of generative AI technologies that can create content such as text in response to human input. Microsoft’s Bing chatbot incorporates the GPT-4 model, and the software maker has announced security and productivity programs that will use it as well.

AMD is already a chip supplier to Microsoft, as well as other cloud providers, such as Google and Oracle.

Read the full Bloomberg report here.

This is breaking news. Please check back for updates.

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